INTELLECTUAL PROPERTY (TRIPS)
Negotiations, implementation and TRIPS Council work

The WTO’s Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS) has a wide ranging work
programme, including TRIPS and health, some aspects of geographical
indications and the review of some TRIPS provisions. This briefing
note contains an explanation of the subjects.

Now largely settled is the question of how to
ensure that patent protection for pharmaceutical products does not prevent
people in poor countries from having access to medicines — while at the
same time maintaining the patent system’s role in providing incentives
for research and development into new medicines. The remaining task is
to convert a General Council decision of 30 August 2003 into a permanent
amendment of the TRIPS Agreement.

Underlying the deliberations are flexibilities
written into the TRIPS Agreement, such as “compulsory licensing”. This
enables governments to allow a competitor to produce a patented product
or use a patented process without the permission of the patent holder,
under certain conditions aimed at safeguarding the legitimate interests
of the patent holder, including a right to be paid for the authorized
copies of the products. Parallel importing is also possible. This is
where a product sold by the patent owner more cheaply in one country
is imported into another without the patent holder’s permission. Countries’ laws
differ on whether they allow parallel imports. The TRIPS Agreement states
that governments cannot bring legal disputes to the WTO on this issue;
the Doha declaration on TRIPS and public health clarified that this means
countries are free to set up their rules and procedures dealing with
parallel imports.

These flexibilities do not have to be put into
practice to have an effect. They are sometimes used as a means of bargaining.
For example, the threat of a compulsory licence can encourage a patent
holder to reduce the price.

The Doha mandate

Before the 2001 Doha Ministerial Conference,
some governments were unsure of how these flexibilities would be interpreted,
and how far their right to use them would be respected. The African Group
(all the African members of the WTO) took the lead in pushing for clarification.
A large part of this was settled when WTO ministers issued a special
Declaration on TRIPS and Public Health at the Doha meeting in November
2001, alongside their main Doha Declaration.

In the main declaration, they stressed
that it is important to implement and interpret the TRIPS Agreement
in a way that supports public health — by
promoting both access to existing medicines and the creation of new medicines.

In the separate declaration, they agreed
that the TRIPS Agreement does not and should not prevent members from
taking measures to protect public
health. They underscored countries’ ability to use the flexibilities
that are built into the TRIPS Agreement, in particular compulsory licensing
and parallel importing. And they agreed to extend exemptions on pharmaceutical
patent protection for least-developed countries until 2016. (The TRIPS
Council completed the legal drafting task on this in mid-2002.)

On one remaining question, they assigned
further work to the TRIPS Council — to
sort out how to provide extra flexibility, so that countries unable to
produce pharmaceuticals domestically can import patented drugs made under
compulsory licensing. (This is sometimes called the “Paragraph 6” issue,
because it comes under that paragraph in the separate Doha declaration
on TRIPS and health.)

The issue arises because Article 31(f) of the
TRIPS Agreement says products made under compulsory licensing must be “predominantly
for the supply of the domestic market”. This applies directly to countries
that can manufacture drugs — it limits the amount they can export when
the drug is made under compulsory licence. And it has an indirect impact
on countries unable to make medicines — they might want to import generics
made in countries under compulsory licence, but find that Article 31(f)
poses an obstacle to other countries supplying them.

The TRIPS Council was instructed to find a solution
and report to the General Council on this by the end of 2002. However
it was not until 30 August 2003, shortly before the Cancún Ministerial
Conference, that consensus could be reached. The agreement takes the
form of a General Council decision to waive provisions of Article 31(f)
subject to certain conditions. It enables countries with production capability,
to export drugs made under compulsory licence to countries that cannot
manufacture them.

The waiver will last until the TRIPS Agreement
is amended. It includes provisions on transparency (which give a patent-owner
some opportunity to react by offering a lower price), and special packaging
and other methods to avoid the medicines being diverted to other markets.
An annex describes what a country needs to do in order to declare itself
unable to make the pharmaceuticals domestically.

Over 30 developed countries have made a commitment
within the decision not to import under this decision. And, as recorded
in a statement by the General Council chairperson, a number of others
stated they will only do so in emergencies or extremely urgent situations.

Consensus was achieved with the aid of a Chairman’s
statement, made at the time the waiver was adopted, which sets out a
number of shared understandings about the waiver. The decision refers
to drugs needed to address the public health problems recognized in Paragraph
1 of the original declaration that ministers issued in Doha. This says: “We
recognize the gravity of the public health problems afflicting many developing
and least-developed countries, especially those resulting from HIV/AIDS,
tuberculosis, malaria and other epidemics.”

Since then …

The final step is to convert the waiver into
a permanent amendment of the TRIPS Agreement. The decision said members
would complete this by the end of June 2004, but consensus has not yet
been reached on how to achieve this. Part of the discussion is about
the best way to handle the text, for example how much to put in Article
31 itself and how much in an annex to the TRIPS Agreement.

But members also differ on how closely the amendment
should follow the waiver and how to handle the separate chairperson’s
statement made at the time the General Council adopted the decision.
Some developing countries want to drop provisions that they consider
to be unnecessary for an amendment. Some developed and other countries
say the waiver was so difficult to negotiate that it should be translated
directly into an amendment in order to avoid further delays.

Although the waiver is temporary, so long as
there is no agreement on a permanent amendment the waiver will continue
to be in force.

Geographical
indications in general

A product’s quality, reputation or other
characteristics can be determined by where it comes from. Geographical
indications are place names (in some countries also words associated
with a place) used to identify products that come from these places and
have these characteristics (for example, “Champagne”, “Tequila” or “Roquefort”).
Protection required under the TRIPS Agreement is defined in two articles.

All products are covered by Article
22, which
defines a standard level of protection. This says geographical indications
have to be protected in order to avoid misleading the public and to prevent
unfair competition.

Article 23 provides a higher
or enhanced level of protection for geographical indications for wines
and spirits: subject
to a number of exceptions, they have to be protected even if misuse would
not cause the public to be misled.

Exceptions (Article 24). In some cases,
geographical indications do not have to be protected or the protection
can be limited. Among the exceptions that the agreement allows are: when
a name has become the common (or “generic”) term (for example, “cheddar” now
refers to a particular type of cheese not necessarily made in Cheddar,
in the UK), and when a term has already been registered as a trademark.

Information
that members have supplied during a fact-finding exercise shows that
countries employ a wide variety of legal means to protect
geographical indications: ranging from specific geographical indications
laws to trademark law, consumer protection law, and common law. The
TRIPS Agreement and current TRIPS work in the WTO takes account of that
diversity.

Two issues are debated under the Doha mandate,
both related in different ways to the higher (Article 23) level of protection:
creating
a multilateral
register for wines and spirits; and extending the
higher (Article 23) level of protection beyond wines and spirits. Both are as contentious
as any other subject on the Doha agenda. Although they are discussed
separately, some delegations see a relation between the two.

Geographical indications 1: the multilateral
register for wines and spirits

This negotiation is the only issue to take place
in dedicated “special sessions” (i.e. negotiating sessions) of the TRIPS
Council. It is about creating a multilateral system for notifying and
registering geographical indications for wines and spirits. These are
given a level of protection that is higher than for other geographical
indications.

The work began in 1997 under Article 23.4 of
the TRIPS Agreement and now also comes under the Doha Agenda (the Doha
Declaration’s paragraph
18).

The Doha mandate

The Doha Declaration’s deadline for completing
the negotiations was the Fifth Ministerial Conference in Cancún in 2003.
Since this was not achieved, the negotiations are now taking place within
the overall timetable for the round.

Since then …

Three sets of proposals have been submitted
over the years, representing the two main lines of argument in the negotiations
and some proposed compromises. The latest are:

The EU’s detailed paper, circulated in June
2005, proposes that registering a geographical indication would establish
a “rebuttable presumption” that the term is to be protected in other
WTO members — except in a country that has lodged a reservation on
permitted grounds within a specified period (for example, 18 months).

Another
paper from a group of countries (Argentina, Australia, Canada, Chile,
Costa Rica, Dominican Republic, Ecuador, El Salvador, Honduras, Japan,
Mexico, New Zealand, Chinese Taipei and the US) proposes a decision
by the TRIPS Council to set up a voluntary system where notified geographical
indications would be registered in a database. Those governments choosing
to participate in the system would have to consult the database when
taking decisions on protection in their own countries. Non-participating
members would be “encouraged” but “not obliged” to consult the database.

Hong Kong, China has proposed a compromise
(document TN/IP/W/8). Here,
a registered term would enjoy a more limited “presumption” than under
the EU proposal, and only in those countries choosing to participate
in the system.

Geographical indications for all products are
currently covered by Article 22 of the TRIPS Agreement. The issue here
is whether to expand the higher level of protection (Article 23) — currently
given to wines and spirits — to other products.

Some countries have said
that progress in this aspect of geographical indications would make
it easier for them to agree to a significant deal in agriculture. Others
reject the view that the Doha Declaration makes this part of the balance
of the negotiations. At the same time, the European Union has also
proposed
negotiating the protection of specific names of specific agricultural
products as part of the agriculture negotiations.

The Doha mandate

The Doha Declaration notes in its paragraph 18
that the TRIPS Council will handle work on extension under the declaration’s
paragraph 12 (which deals with implementation issues). Paragraph 12 says “negotiations
on outstanding implementation issues shall be an integral part” of the
Doha work programme, and that these issues “shall be addressed as a matter
of priority by the relevant WTO bodies, which shall report to the Trade
Negotiations Committee [TNC] … by the end of 2002 for appropriate action.”

Delegations
interpret Paragraph 12 differently. Many developing and European countries
argue that the so-called outstanding implementation issues are already
part of the negotiation and its package of results (the “single undertaking”).
Others argue that these issues can only become negotiating subjects if
the Trade Negotiations Committee decides to include them in the talks — and
so far it has not done so.

Since then …

At first they continued in the TRIPS Council.
More recently, they have been the subject of informal consultations now
chaired by WTO deputy director-general Rufus Yerxa. Members remain deeply
divided, with no agreement in sight, although they are ready to continue
discussing the issue.

Those advocating extension include Bulgaria,
the EU, Guinea, India, Jamaica, Kenya, Madagascar, Mauritius, Morocco,
Pakistan,
Romania, Sri Lanka, Switzerland, Thailand, Tunisia and Turkey. They
see the higher level of protection as a way to improve marketing their
products
by differentiating them more effectively from their competitors. The
latest EU proposal calls for the TRIPS Agreement to be amended so that
all products would be eligible for the higher level of protection in
Article 23, and the exceptions in Article 24, together
with the multilateral registration system
currently being negotiated for wines and spirits.

Patents and plants, animals, biodiversity and
traditional knowledge

Originally this was about reviewing Article 27.3(b),
which deals with whether plant and animal inventions should be covered
by patents, and how to protect new plant varieties. The discussion has
expanded to include biodiversity and traditional knowledge. It takes
place in the regular TRIPS Council and special consultations under Deputy
Director-General Rufus Yerxa, and not in the negotiating “special sessions”.

A wide range of issues have been raised over
the years. One question that is a focus of the latest discussions is
on “disclosure” — whether patent applicants should be required to disclose
the country of origin of genetic resources and traditional knowledge
used in the inventions, to provide show that they received “prior informed
consent” to use the resources and knowledge, and to provide evidence
of “fair and equitable” benefit sharing. The ideas put forward include:

Disclosure as a TRIPS obligation: A
group of developing countries represented by Brazil and India wants
to amend
the TRIPS Agreement so that patent applicants are required to disclose
the
country of origin, to show evidence that they received “prior informed
consent”, and evidence of “fair and equitable” benefit sharing.

Disclosure
through WIPO: Switzerland has proposed instead an amendment
to the regulations of WIPO’s patent treaties so that domestic laws
may ask inventors to disclose the source of genetic resources and
traditional
knowledge when
they apply for patents, or face penalties.

Disclosure, but outside
patent law: The EU suggests examining a requirement for all patent
applicants to disclose the origin of genetic material, or face legal
consequences,
but outside patent law.

Use of national legislation, including contracts
rather than a disclosure obligation: The US has argued that the
relevant objectives could best be achieved through national legislation,
and
contractual arrangements based on the legislation, that could include
commitments
on disclosure.

Non-violation complaints (Article 64.2)

In some situations a government can complain
to the Dispute Settlement Body even when an agreement has not been violated.
These “non-violation
complaints” are allowed if one government can show that it has been deprived
of an expected benefit because of another government’s action, or because
of any other situation that exists even if an agreement or specific commitment
has not been violated.

Non-violation complaints are possible for goods
and services (under GATT and GATS, but in the case of services only for
market-opening commitments). However, for the time being, members have
agreed not to use them under the TRIPS Agreement. The latest extension
to the moratorium, included in the 1 August 2004 General Council decision
(the “July 2004 package”), expires at the Hong Kong Ministerial Conference.